Jihad Azour, Director, Middle East and Central Asia Department, said on Friday the IMF forecast for the MENAP region (Middle East, North Africa, Afghanistan, and Pakistan), projects an increase from 3.7 percent in 2016 to 4 percent in 2017 for MENAP oil importers.
By Alpha Bedoh Kamara
Non-oil growth for the MENAP oil exporters is expected to accelerate from 0.4 percent in 2016 to 2.9 percent in 2017, although the production cuts following the OPEC agreement are reducing headline growth.
“While this represents an improvement, our medium-term growth projections are too low to create enough jobs or improve living standards. Many countries, especially oil importers, are also carrying high levels of debt. Therefore, both oil exporters and importers are facing two critical policy imperatives: fiscal consolidation and structural reforms.
“On the fiscal consolidation side, we are encouraged by the strong policy measures many countries have adopted, such as plans for a value-added tax in the GCC countries, streamlining current spending in Algeria and Oman, and energy subsidy reform. The fiscal deficits for oil exporters were 10 percent of GDP last year, but are expected to fall below 5 percent this year, in part due to higher oil prices. Oil importers are also making progress—with deficits expected to drop from 7.2 percent in 2016 to 6.6 percent in 2017. However, these countries still face average debt levels of about 80 percent of GDP,” Azour said.
He noted that fiscal consolidation and fiscal reforms will remain an ongoing priority across the region and each country should consolidate their positions at a pace appropriate to their circumstances, and in a manner that is as growth friendly as possible.
“We encourage countries to give priority to productive spending in areas such as education, technology and innovation, and health care while protecting the poor and vulnerable,” he said, adding that reducing exemptions and expanding the tax base can also help make reforms fair and more inclusive.
On the structural side, Azour said the region recognises the need for reforms that diversify economies, spur private sector-led growth, and boost competitiveness and productivity. He said countries that have already developed plans, such as Saudi Arabia, the focus needs to be on implementing them.
“These reforms will be necessary to generate the jobs needed by the millions of new job seekers expected to enter the labour force over the next five years,” he said.